Pressure groups for elderly people campaigned for the change. Photograph: Montgomery Martin/Alamy

People receiving state-funded care in their own homes will now be given additional protection by the Human Rights Act, ministers have conceded following pressure from the Liberal Democrat side of the government.

An amendment to the care bill in the Lords will be tabled to make sure the Human Rights Act covers people receiving care in their own home, whether from the state or a private body under contract to the state. It will not apply to self-funded, privately provided care.

The announcement represents a U-turn and follows six months of campaigning by pressure groups for elderly people, as well as by the Liberal Democrats.

The issue of protecting vulnerable elderly people has been pushed back and forth between the Commons and the Lords, with the Ministry of Justice arguing that previous case law did not mean there was any ambiguity about the extent to which human rights legislation covered state-funded social care.

More broadly, many senior Tory ministers want to see the government withdraw from the European convention on human rights.

There has been cross-party pressure to extend the protection of the act beyond those currently covered – mainly those receiving care in care homes.

A senior Lib Dem source said: "This has been a very important issue for the Liberal Democrats. Nick Clegg, the care minister, Norman Lamb, and the previous Liberal Democrat care minister, Paul Burstow, in particular, have worked hard, against initial Conservative resistance, to ensure that people who receive care in their own homes should be covered by the Human Rights Act.

"It shouldn't be the case that just because you get care in your own home rather than moving into a care home that your human rights are ignored. It is a fundamental human rights issue and this will go one step further to make sure the rights of vulnerable older people are protected. Respect for a person's human rights should be at the heart of good care."

The Lords voted by 247 to 218 in October to insert a new clause into the care bill applying the Human Rights Act to all social care regulated by the Care Quality Commission (CQC), including self-funded or private care.

But parliament's joint committee on human rights said this amendment went too far because it felt the act should not be applied directly to purely private arrangements when there is no state involvement.

Ministers argue that the Human Rights Act is about public functions, and rebalancing relationships between the individual and the state, not about contractual relationships between companies and individuals. It would have been the first time the Human Rights Act was extended purely to the private sphere, ministers argued.

Campaigners for the reform such as Age Concern have said: "Without greater legal clarity, people who suffer indifference or abuse are doubly vulnerable, unsure of whether the law protects them. Equally, service providers, and particularly staff seeking to challenge poor practices, are left unsure of where they stand. Time and again inquiries such as the equality and human rights commission's inquiry into home care uncover serious, systemic threats to the basic human rights of those receiving care services."

The Shadow social minister Liz Kendall welcomed the government's change of heart. She said: "This is a welcome U-turn by ministers, including the Lib Dem care minister, who previously voted against having this human rights protection in the care bill currently going through parliament.

"During the passage of the bill, Labour voted in favour of the Human Rights Act covering those who receive publicly funded or arranged care, and tabled amendments to restore the measure when Tory and Lib Dem MPs took it out. Ministers appear finally to have seen sense on the issue, but the wider problem of the crisis in care created under this government remains. Budgets have been cut to the bone, with £2.7bn lost since 2010, and the care bill is depressingly unambitious."